Currency and Inflation

[B-29 Bomber]

A weird thoughts always enter my mind and one just poped in my head right now. In all civ games gold has always been the currency of trade. But what if we could add real life currency model(extremely simplified of course). Basics of this is that there would be gold then there would be a national currency. Gold would still be the currency of international trade but national currency would be an option if your low on gold. But remember that inflation could rear it's ugly head. The inflation system should be simple like, maybe when the ratio of gold to paper currency is 1:1 then there is no inflation. But if it's something like 1:2 then that's 50% inflation. The higher the inflation gets the more expensive stuff gets. There should also be an unhappiness factor. Everything you can buy like tiles and units with paper currency has a gold price and vise versa. Oh a new weird thought just poped into my head. Who knew that you would be privy to two weird thoughts in one thread. Maybe you can get a city state to adopt your currency as their currency. This could give you a certain amount of gold/currency per turn. The amount of currency you get is by default equal to the amount of gold you have. Now if your gold is less than the amount of currency you have then the only way you will get more currency is to print it. You can only print as much currency as you have gold in a percent. So if you have 100 gold and 110 currency and the print rate is 25% of gold then you can only print 25 currency. So over all it's best to stay on the gold standard unless you have a clear plan to set it right again. Now I know that the odds aren't good that you people will like this but remember this: this could be an excelent learning tool to teach people about why something costs as much as it does and how certain governments and countries either became poor or collapsed like 1920s Germany or Africa. If anyone wants to explain the inflation system in detail go for it. It would be a good lesson for all of us.

 

[Cutlass]

Civ4 has inflation. Just doesn't make a big deal of it. A gold standard does not stop inflation. So if you really wanted to add that, then you have to add a lot of complexity, including the deflations and depressions that gold causes. Best to leave it out.

 

[B-29 Bomber]

Civ4 has inflation. Just doesn't make a big deal of it. A gold standard does not stop inflation. So if you really wanted to add that, then you have to add a lot of complexity, including the deflations and depressions that gold causes. Best to leave it out.

Okay it seems you've swallowed a lot of propaganda from the government about how the gold standard is bad. The gold standard does not cause depression. Basic stupidity and public distrust of the system causes depressions. If the government had been able to keep the gold to dollar ratio at roughly 1:1 then deflations would be rare. No system is perfect however. The great depression was not caused by the gold standard. It was pure stupidity on part of the stockholders(most of them). Most of the people bought stock at a margin which they sold at low prices so they didn't get their money back so the banks where they got the loans for the stocks didn't get their money back so they closed down then the farmers started to suffer from that and the dustbowl. And it just spiriled out of control from there. Then in the 1970s we were taken out of the gold standard and now a dollar is only a dollar because the federal reserve tells us it's worth that. Not only that but now the government can print as much as they want which they are now doing at an alarmingly fast rate. Anytime there wasn't the gold standard such as the confederacy and the days of the continental congress currency was wildly unstable and became almost dependent on the fortunes of war. So the that's why the gold standard is good for creating relatively stable economies. Oh there will be ups and downs based on other factors but so long as no one does anything stupid the currency will bounce back and most likely the economy too. Right now if you have a dollar in your hand you can say that your holding a worthless piece of paper-cloth(because it's not real paper). I think this could add to diplomacy. Your forced to barrow gold from another country to support your paper currency to make your people happy. Because excessive inflation could anger people. To end this don't think I was insulting you most people are led to beleive this myth that the gold standard is bad and we should be glad to be well shot of it.

 

[Cutlass]

Gold causes instability. Look it up.

 

[Sciguy001]

Emos cause depressions, sillies, not gold. Gold causes happiness and joy

 

[B-29 Bomber]

Gold causes instability. Look it up.

Well we'll just have to agree to disagree on that. Now I'd like to quote someones sig: Civ is a game not a simulation of real life. End quote. Now you can add things that add to game play which I think it does(it makes you think more about you gold supply). It may not be perfect; but what is? Nothing. Not only that but it is rather simple. Or as simple as I can make it. As a little boy I've always had problems simplifying fractions.

 

[TheDS]

Oh, you gotta love it when someone says something like "X causes Y, look it up" and then doesn't provide any evidence. Who's going to bother if you don't? Who even knows where to find authoritative evidence? Certainly not me.

I'd like to know why, if gold is so bad, everyone's trying to convince me to buy some? Why does it's value continue to climb? I've got my suspicions based around human nature, but nothing based on solid economic ground.

 

[Cutlass]

Gold's value does not continue to climb. If you had bought gold in 1980, you would have underperformed the stock market by a vast amount. Gold as an investment is something you may grab for very short periods of time in times of turmoil. By the time the price of gold starts going up, you are already too late to get on the bandwagon. People are urging you to buy it now because they know it isn't going much of any higher, so they can sell to you high and buy back from you after it falls. That's why it is a crap investment.

As to why it is a crap economic policy, there are rare occasions when the quantity of gold changes at an out of the ordinary rate. That makes people conclude that it is stable. However, the rate of gold growth is less than what the economy wants to grow. So that causes instability. And the demand for money changes just over the course of a year. It is both seasonal and changes with economic growth. A money supply that does not change in tandem with the changing demand for money from the real economy disrupts the economy. Further, when gold is the only money, the price of it is prohibitively high for most people. And that means that most people have to live outside the money economy, or be driven into debt. That resulted in populist movements such as the Free Silver movement.

 

[President]

Gold's value does not continue to climb. If you had bought gold in 1980, you would have underperformed the stock market by a vast amount. Gold as an investment is something you may grab for very short periods of time in times of turmoil. By the time the price of gold starts going up, you are already too late to get on the bandwagon. People are urging you to buy it now because they know it isn't going much of any higher, so they can sell to you high and buy back from you after it falls. That's why it is a crap investment.

As to why it is a crap economic policy, there are rare occasions when the quantity of gold changes at an out of the ordinary rate. That makes people conclude that it is stable. However, the rate of gold growth is less than what the economy wants to grow. So that causes instability. And the demand for money changes just over the course of a year. It is both seasonal and changes with economic growth. A money supply that does not change in tandem with the changing demand for money from the real economy disrupts the economy. Further, when gold is the only money, the price of it is prohibitively high for most people. And that means that most people have to live outside the money economy, or be driven into debt. That resulted in populist movements such as the Free Silver movement.

What you stated are valid arguments against the gold standard, but there are also counterarguments as well. I agree utterly that a gold standard may not all the time meet the demands of the investors, but gold standard activists conclude that that is a positive of a gold standard. When you have a paper currency that a government can print as much as it arbitrarily wants to meet the demands of investors, you see that bubbles form, and, as you can observe in recent histories in the US housing market, popping bubbles pop the economy, whereas, under a gold standard, inflation is much harder to generate, and bubbles cannot form in such an economy. The primary argument that gold standard activists have for the reemergence of the gold standard into the US or any other government is absolutely that it regulates the government that it adopts.

Almost all governments today use paper currency, and that paper gets its value on the merit alone that it is a currency. Paper, in and of itself, however, has no considerable value; therefore, the government is free to create as much money as it wants by its own standards and wants. Gold, however, would have value with and outside of being a currency, because it is a scarce resource, and, culturally and traditionally, many cultures recognize gold with high value. In that way, governments would have to be more prudent in coining such money, because it would cost the government money to coin the gold. Now, my position is that the currency doesn't necessarily have to be gold. It could be platinum, silver, bronze, or whatever. I believe the term for that would then be a, "Noble Metal Standard." Whatever the resource is, however, is that it has to have considerable value outside of just being a governmental currency, so the economy just cannot be flooded with it.

Now, even with all of this, I still believe that the currency should be an option in Civilization games, because people should be able to choose what they want to use as their empire's currency. Presently, the currency in Civilization seems to be a gold standard, but people should be able to make any of the resources of their civilization a standard, or even use a paper standard if they want to mimic modern economies. The only thing is that, under a paper standard, the player would have to decide the amount of money to print, and the currency's value would be a result of the amount of money printed and its relation to other currencies, if we want to be realistic here.

 

[lazyguy]

People are urging you to buy it now because they know it isn't going much of any higher, so they can sell to you high and buy back from you after it falls. That's why it is a crap investment.

Here in the UK we're being assaulted by adverts telling us to sell our gold...

 

[megamanciv]

Here in the UK we're being assaulted by adverts telling us to sell our gold...

if you are talking about those ads that take your old jewlery and send you a check, they are all mostly a scam.

http://consumerist.com/2009/02/10-confessions-of-a-cash4gold-employee.html


but that is beside the point. It has to be real difficult to make a civ game, to make it simple enough to appeal to the masses, but technical enough to appease the real fans. I think the problem with making it too technical is that it becomes exploitable...the SE in civ4 almost feels like cheating the system. To try and make it a fair game, the AI just gets bonuses. The AI can never compete fairly with a human who has figured out the game.

 

[B-29 Bomber]

I think that my idea is simple enough that it could be put in easily and it would force people to think. "What would be cheaper to use to buy a tile or a unit: Gold or Paper Currency?" and if the answer to that is paper currency, "If I print more Paper Currency than gold would I be able to make up the difference in a short enough amount of time to prevent wide spread unhappiness?". If the answer to that is no then you best hope that you have enough luxuries and entertainment to distract them from the hardships to come. Now this feature wouldn't be available until you got the correct tech, like currency(maybe paper currency as a tech?) or economics. If your currency is relatively stable for a period of time(long) then you would then be asked by certain civs to become their standard(meaning you'd be able to trade currency(instead of just gold) with that civ(or even City state). Once that starts happening you'll start getting some pretty good gold bonuses, thus stimulating you economy further. To have a stable currency its ratio to gold has to be within this range: (Gold:Currency) 1:.8-1:1.2. Also you have to have a lot Currency, that means you have to have a lot of gold to back that currency. To be more obvious you have to be the richest civs by a landslide. Let's say your gold per turn is +100 and you are the richest civ then the 2nd place has to have something like +50. If your within that sweat spot then civs will start asking during negotiations. The bigger the gap the more they will ask because you've become a good investment. Now that doesn't mean you can't fall off. Like say your invaded and you have to print a lot of money to keep units at the front lines then your ratio will go outta wack and your rating as a stable economy starts to slip. Though it would take a lot to convince the civs invested in your economy to dump you(especially if your not the aggressor) they will start dumping you, like a prom night dumpster baby.Family Guy